GameStop Approved to Invest in Bitcoin, Stock Surges 2,100%

GameStop, the video game retailer that gained notoriety for its dramatic stock price surge in 2021, has been making strategic business decisions to ensure its longevity. The company has been focusing on higher-margin items and reducing its physical footprint. Now, GameStop is looking to secure its future by investing in Bitcoin (BTC), a move that has proven successful for Strategy, a business intelligence firm turned Bitcoin bank. Strategy has accumulated over 500,000 BTC through successive purchases, and despite experiencing significant volatility, its stock has rallied more than 2,100% since acquiring its first Bitcoin in 2020.

On March 25, GameStop received board approval to invest in Bitcoin and US-dollar-pegged stablecoins. With a corporate cash balance of nearly $4.8 billion, GameStop has the financial resources to make a substantial investment in Bitcoin. This represents a significant increase from the company's balance sheet of around $922 million a year earlier. GameStop CEO Ryan Cohen's meeting with Michael Saylor in early February suggests that Cohen may have been influenced by Saylor's Bitcoin strategy. Cohen confirmed the meeting by posting an uncaptioned photo of him and Saylor on Feb. 8. Saylor continues to accumulate BTC, announcing earlier in the week that Strategy had acquired another 6,911 BTC, bringing its stockpile to 506,137 BTC.

GameStop's decision to invest in Bitcoin is a strategic move that could potentially secure the company's future. By following Strategy's playbook, GameStop aims to ride the Bitcoin wave and ensure its relevance for at least the next decade. This investment in Bitcoin and stablecoins could provide GameStop with a new revenue stream and diversify its business model, reducing its reliance on traditional retail sales. The company's substantial cash reserves give it the financial flexibility to make significant investments in Bitcoin, which could potentially yield high returns in the long term. However, the success of this strategy will depend on the future performance of Bitcoin and the broader cryptocurrency market.